You don't need to be rich to start investing in stocks. In fact you can actually get started with just a few dollars thanks to fractional shares.
In this post I'm going to share with you three completely different options for investing in stocks with just $100. Remember everyone needs to start investing somewhere. And the sooner you start the easiest it gets later on in life.
Acorns is my go to investing product at the moment. I've been using it for the past 2 years. Acorns invests your spare change in a diverse portfolio of stocks and bonds. And the best bit – you can get started with as little as $5. Your spare change gets invested in fractions of ETFs (exchange traded funds). These ETFs are made up of hundreds and sometimes thousands of stocks. So while you're not picking which stocks to invest in directly, you are still investing heavily in the stock market.
So does acorns work? Absolutely! Since I started using it, my portfolio has grown around 28% which has been an awesome return. I don't think I could have managed this return, if I tried picking stocks on my own.
Acorns works because it invests small amounts constantly. This is known as “Dollar Cost Averaging” and it's a solid investing tactic that has been proven to be effective.
If you're just getting started investing, you honestly can't go wrong with this type of app.
I use eToro to buy stocks from all over the world. What I love most about eToro is you don't need to buy entire stocks. You can choose to invest any amount in a single stock. That could be $50 or $5000. Because eToro allows you to buy fractional shares, you can pretty easily build up a diverse portfolio of stocks. Instead of just buying one share of Alphabet for over $1000+ you can buy 20 different fractional shares for the same amount of capital.
eToro offers stocks from all over the world. Including the U.S, Europe and Asia.
Disclaimer: 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Robinhood changed the stock trading game by offering zero commission stock trades. One of the reasons why you can't really buy stocks with just $100 on traditional platforms, is they charge large fees. In order to offset these fees/commissions, you need to invest a large amount of capital. If you were to invest $100, 20% of that would go towards fees. So before you even opened a trade you'd be down by 20%.
So in theory investing through Robinhood is a good option. Remember, lots of stocks are priced over $100, so you won't be able to buy those, but there are many that aren't either. Robinhood is a great option for buying a few shares here and there.
If you don't have experience picking stocks, then I would still recommend Acorns over Robinhood. The portfolios on Acorns have been put together by experts and they do work. Putting together a portfolio on your own is a higher risk strategy.